After falling 3.5% Friday on OPEC’s inaction, WTI is down a further 5% this morning, trading at $37.97 in early morning action.
WTI Intraday 12/7/15
chart source: bloomberg
After digesting the OPEC decision over the weekend, traders concluded Monday that the lack of action on quotas signals a free-for-all among OPEC producing nations.
One comment in particular from Iranian oil minister Bijan Namdar Zanganeh had traders talking on Monday morning: “everyone does whatever they want.”
“It means more OPEC oil next year,” Jamie Webster, a Washington-based oil analyst for IHS Inc., told Bloomberg of the organization’s Dec. 4 decision. “OPEC is not cutting. With Iran looming, as well as largely only upside risk for Libya, the smart money is on more, and not less, production.”
Traders are beginning to suspect that OPEC’s spare capacity could be tapped resulting in millions more barrels next year than this year. As this fear becomes more widespread, panic selling could send WTI into the low-$30s in very short order.